Thanks to an inventory check-in and check-out report, a landlord in North London was able to provide sufficient evidence for their claim against former N-Dubz star and X Factor judge Tulisa Contostavlos.
Landlord Andrew Charalambous was paid over £70,000 for damages after it was heard that the luxury home had been ‘trashed’ during her tenancy.
The landlord claimed the three-bedroom property, located in Enfield and costing £3,466 per month to rent, was let in ‘tip-top condition’ but returned to him in an ‘appalling’ and ‘unlettable’ state.
The reported damage carried out between September 2014 and July 2016 included:
A smashed sink
Cigarette burns
Stains
Doors ripped from hinges
Contostavlos’ lawyer argued that the damage was not caused by her and that it was not above ‘normal wear and tear’. However, judge David Saunders ruled against her and she was ordered to pay compensation, interest and legal costs in excess of £70,000 to Charalambous.
The inventory report that provided this evidence was undertaken by Mitchel Walters, the owner of No Letting Go’s Barnet and Enfield franchise. It deals with many high-end properties in the capital.
The landlord has described the inventory work carried out at the property as ‘excellent’.
Mitchell Walters comments: “We were pleased to be able to contribute towards helping the landlord win compensation in his case against the former tenant as the property was treated very poorly and would have cost him thousands to renovate and repair. Our inventory reporting helped to demonstrate its pristine condition at the start of the tenancy.
“Hopefully the high-profile nature of this case will help to remind landlords and letting agents about the potential financial implications of property damage if they don’t have professional and comprehensive measures in place.”
Nick Lyons, CEO and Founder of No Letting Go, adds: “We can see from this case the importance of an independently and professionally compiled inventory.
“It’s clear that the type of damage being reported was certainly not wear and tear, but when serious disputes between landlords and tenants like this occur, being able to prove it through evidence becomes crucial if landlords want to recover costs for repairs and replacements.
“This case also shows that it doesn’t matter whether a rental property is at the very top or bottom end of the market, landlords and letting agents need to follow the same procedures when it comes to documenting its condition before, during and after a tenancy if they won’t ensure they are protected against damage.”
When a tenancy on a rental or investment property comes to an end, you want to know you can take back the property in the condition in which it was handed over – or at least that you can make appropriate deductions from the deposit to recover any repair and cleaning costs you may incur.
In order to do this in an era of tenancy deposit schemes, it is essential to be able to provide indisputable evidence such as that produced using an independent inventory or an unbiased check-out report.
Here, independent inventory service skribes.co.uk explains why these types of reports are more important than ever.
The cost of becoming a landlord
The number and scale of additional expenses involved with becoming a landlord take many people by surprise when they first start investing in rental property.
Because of this, it can be tempting to save a little on admin fees by choosing not to have an independent inventory or check-out report produced.
However, this can be a false economy – and while inventories are in principle optional, in practice they are an essential part of protecting yourself against false claims from tenants, or damage that you cannot prove is the fault of a departing tenant.
The extra confidence this creates can help to establish a more positive and trusting relationship between landlord and tenant, often encouraging tenants to pay their rent on time, take better care of the property, and be honest about any accidental damage that occurs.
Choosing an independent inventory clerk
A good independent inventory clerk will be able to produce accurate documentation of the fixtures and fittings in each of your properties, supported by clear, high-quality, well lit photographs with verifiable time stamps.
In a survey of more than 2,500 tenants who had part of their deposit retained, it was clear that all manner of accidental but costly damage can occur, even with ‘good’ tenants.
Examples include:
Broken furniture (29%)
Marks on the walls (24%)
Carpet stains (21%)
Redecorations (12%)
Mould (9%)
Inventories and check-out reports don’t just document the damage done; crucially, they also help to prove which party was at fault, allowing you to justify deductions from tenants’ deposits.
Research published in June 2019 by Citizens Advice showed that as many as 60% of tenants in the UK claim to be living in a property that has suffered disrepair in the past two years that was not their fault, and that is their landlord’s responsibility to fix.
Protecting your income as a landlord
The first half of 2019 was a challenging time for landlords’ incomes. The Fitness for Human Habitation Act Bill became an Act of Parliament on December 20th 2018 and came into force on March 20th 2019.
On May 30th 2019 it was followed by the Tenant Fees Act, which restricts security deposits on most properties to the equivalent of five weeks’ rent – still one week more than Citizens Advice originally called for – and also prevents landlords from charging tenants a check-out fee.
However, this should not be taken to mean that a check-out report is not still an important part of protecting your income as a landlord, especially at a time when more and more protection and control is being handed to renters.
Citizens Advice chief executive Gillian Guy said in May: “We look forward to working with the government to further strengthen the hand of renters in a market where they have little bargaining power.”
What should an independent inventory contain?
An accurate, unbiased and independent inventory and check-out report helps to remove the risk of having to pay for damages or losses that are the fault of your tenant.
It can also demonstrate that you have met your legal obligations in certain aspects of tenant safety, for example fitting and testing carbon monoxide detectors and smoke alarms.
Some of the main areas that should be covered in a landlord inventory and check-out report include:
Furniture, fixtures and fittings – listed with a description of their condition supported by written and time-stamped photographic evidence.
Alarms and detectors – mains-powered, tested and in good working order, as well as anything that needs maintenance or replacing in line with health and safety obligations.
Fuse boxes – these should be located and logged when new tenants move in.
Fire label regulations – checking and documenting compliance with furniture labelling.
Meter readings – recording all relevant utilities information and time-stamped meter readings when tenants move out or new tenants move in.
Any other details considered relevant or required for an accurate report, with a view to preventing disputes and protecting security deposits for the landlord.
Inventories and check-out reports are more than just a formality or an admin burden; they are your due diligence, ensuring that the value of your investment in your rental property is catalogued and detailed in case of any future disputes.
But ideally they go further even than that, as simply having a comprehensive inventory in place at the start of a tenancy can go a long way to preventing any disputes from arising, as tenants know you have the evidence needed to prove if damage was caused by them.
Using an independent inventory report and check-out report to recover costs
In circumstances where a departing tenant has left damage to the property, an inventory can be a crucial piece of evidence in recovering those costs from the security deposit.
With deposits now held in a third-party deposit protection scheme, you need to have this evidence if you want a good chance of succeeding with any claim to the tenant’s deposited funds.
Government guidelines published in 2019 describe an inventory as “a written record of the condition the property was in at the start of the tenancy, including details of anything that was already damaged or worn”.
While you might be reluctant to record pre-existing damage, this can be a further way to show that you are taking your own responsibilities seriously in terms of admitting your own liability – and that any damage that is caused by the tenant will be treated as their liability.
This can also be instrumental in getting the tenant to agree to the inventory, and you should always make sure that their agreement is recorded before they move in.
You are still liable for the burden of proof, and using an independent, unbiased inventory clerk for your check-in and check-out reports helps to ensure that the evidence you supply is objective and persuasive in any claim you make.
In doing so, you have a much stronger claim when one of your properties is left in an unfit condition by a tenant – and claiming against their security deposit can help to cover the cost of repair and ensure the property continues to yield a good rental income for the future too.
Inventory clerks are increasingly reporting compliance and
safety issues within tenanted properties, according to the Association of
Independent Inventory Clerks (AIIC).
The organisation fears that independent inventory clerks are
identifying and reporting on safety issues that could be criminal offences in
private rental housing in the UK.
The AIIC claims that the recent introduction of the Homes
(Fitness for Human Habitation) Act 2018 has led to a rise in compliance and
safety issues being picked up by the clerks it works with.
Danny Zane, the Chair of the AIIC and Founder of My Property Inventories, is
concerned: “The level of mandatory
checks has increased greatly over the last decade, from gas safety to smoke detectors being present in the right places and working on the move-in
date. For example, when a landlord instructs us to carry out the
inventory check-in, they can gain solid proof that the detectors were
present, power tested and working on the move in day.
“However, our clerks are finding properties
that just do not tick all the required boxes when it comes to
habitation and lawful responsibility. Thankfully, landlords and agents are
always very grateful that we are on site and able to note issues in order to
get them resolved.”
He adds: “Independent property inventory
reports are now about much more than the cosmetics of a property; our services
are a vital part of the system that keeps tenants and landlords safe and
well.”
Landlords, we urge you to identify and rectify
any safety issues within your properties, either before new tenants move in,
during periodic inspections, or when a tenant alerts you to a problem.
Meanwhile, if an inventory clerk identifies a
compliance issue with your property, then you must work to resolve it
immediately. Even if you compile your own inventory, your checks should uncover any safety issues.
It has never been more important to ensure that all parties involved in a private tenancy have the protection of independent inventory reporting.
Indeed, this month, the Government and the Tenancy Deposit Scheme (TDS) have released guidance around inventory reporting.
The Government’s Ministry for Housing, Communities and Local Government has published the following statement for landlords: “If the property is not left in a fit condition, you can recover the costs associated with returning the property to its original condition and/or carrying out necessary repairs by claiming against the tenancy deposit.
“You should justify your costs by providing suitable evidence (e.g. an independently produced inventory, receipts and invoices).”
It advises that it is preferable for an independent party to undertake check-in and check-out reports.
Independent inventory reporting is now critical for both landlords and tenants, to make sure that they are protected prior to the check-in and check-out of a tenancy. This way, there can be no error in how the tenancy started and ended, and where any issues or liabilities lie.
David Cox, the CEO of Propertymark, insists: “The sector must not underestimate the importance of a thorough inventory.”
However, Daniel Zane, the Chair of the Association of Independent Inventory Clerks (AIIC), warns that caution must be taken, as not all inventories are there to protect both parties. The landlord, agent or tenant can still legally compile reports and, as yet, no one has to state if there is a connection to the property via the party that has completed the report.Zane advises tenants, landlords and agents to “look out for the AIIC logo or use our safe clerk listing to find a suitable inventory clerk that has no interest in the property, owner or tenant. Our clerks offer the level of protection most would assume a detailed inventory report offers”.
Independent inventory reporting of private rental properties will complement the Government’s plans to reform housing redress by introducing a Housing Complaints Resolution Service, claims No Letting Go.
The provider of inventory services says that a clearer, single route complaints system, which can be supported by impartial, evidence-based documents, such as independent inventories, will help to protect both landlords and tenants.
As well as proposals for landlords to join a redress scheme and the introduction of a new homes ombudsman, plans for a Housing Complaints Resolution Service were also revealed.
The Government says that its aim is to create a “clearer” and “simpler” route to redress, through a “one-stop shop for housing complaints”, to “prevent anyone with a problem being turned away”.
A redress reform working group will now develop the proposals, before they are introduced in the future.
Inventory Reporting to Complement Redress Reform in PRS
Nick Lyons, the CEO and Founder of No Letting Go, says: “We welcome the Government’s plans to reform housing redress and believe the new system will increase consumer confidence, by providing a straight-forward and accessible complaints procedure.”
He explains that a beefed up and clearer redress system will be complemented by independent inventory reporting, and that he supports making inventories mandatory and, preferably, independent.
“An impartial inventory and compliance report can be used as evidence by tenants making a complaint, or for protecting landlords and letting agents against unreasonable or unfounded tenant claims,” Lyons says. “It could give a complainant’s case more weight by showing and describing issues clearly.”
According to The Property Ombudsman’s annual report for 2017, the total amount of money awarded as a result of lettings complaints increased by 18% on 2016, to a total of £931,092 – almost treble the total handed out for sales complaints.
Furthermore, the average lettings award rose by 18%, while the number of resolved lettings cases grew by 11%. Management, and communication and record keeping were the most common causes of complaints.
The Property Redress Scheme has also found that poor inventory reporting is a major reason that letting agents are found culpable for not managing a property properly.
Lyons says: “As we can see, there is more activity in the lettings sector when it comes to complaints. This is why it’s so important that the new system is clear, and uses evidence and documentation effectively, much like the tenancy deposit protection industry.
“As is the case with deposit disputes, handled by tenancy deposit protection schemes, inventories can also prove truly valuable for landlords if they need to prove the condition of their property against an unfair or bogus complaint.”
He concludes: “Effective use of independent inventories could prove valuable to both landlords and tenants in the context of the new redress system, as well as for the organisations handling the complaints. This should contribute towards creating a clearer system, where a higher number of genuine complaints are handled with fair verdicts.”
Independent inventories are as important to landlords as tenancy deposits, the Association of Independent Inventory Clerks (AIIC) insists.
The organisation claims that independent inventories cost as little as £1.50 a week over the course of a 12-month tenancy, questioning why all landlords aren’t investing in this assurance to their investment.
For most responsible landlords and letting agents, the idea of letting a property without a deposit seems unfathomable; handing the keys to a new tenant without any money on account for damages leaves a landlord and their most valuable asset at risk and vulnerable.
Daniel Zane, the Chair of the AIIC, stresses that this is exactly what happens when a new tenancy is not supported by an independently compiled inventory report, which is carried out by a professional, impartial clerk.
He suggests that letting properties without independent inventories is no different to handing the keys to a stranger without any deposit in place. When inventory reports are not in place at the start of tenancies, if there is a need for deductions at the end, there will be absolutely no proof to back up the deductions required.
Without independent inventories, landlords are out in the dark and have to rely on luck, Zane insists, with regards to the reliability of a tenant and their willingness to put right any damages. This leaves the landlord with little to no control over the condition of their property.
He is clear that an inventory report must be conducted by an independent, third party clerk, in order to carry any weight in a deposit dispute and, therefore, ensure the recovery of cost for a landlord.
Zane explains that many landlords are unaware that an independent, professionally compiled inventory report costs as little as £1.50 per week over a 12-month tenancy, which is a small cost when compared to the savings that it can ensure.
With years of experience in the lettings industry, Zane is amazed by the number of landlords that still embark on new tenancies without such assurances in place, putting their finances and properties at risk.
